The Tip Jar: Are air miles credit cards worth it?

And are they better than frequent flyer miles?
Author:
Publish date:

Image placeholder title

Being a Brit in Minnesota I have cause to travel several times a year to see family – which is why I'm retrospectively cursing myself for not saving up air miles.

My wife recently paid for an entire return flight to Vegas using miles. Meanwhile I paid for mine with my own money like a sucker.

To rectify my historic mistakes I've taken a look into credit cards that will let you save up miles year-round, and here's what I've found.

Related: 

The Tip Jar: The best cashback credit cards out there

The Tip Jar: How much can you save giving up your car commute?

Air miles cards vs. frequent flyer miles

The miles you accumulate using a credit card are different from the ones you accumulate using an airline-specific loyalty card, such as Delta's SkyMiles.

Airline loyalty cards tend to be more generous in the amount of miles you accrue compared to credit cards.

With SkyMiles membership, for example, you earn 5 miles of travel for every dollar you spend on a Delta flight. With Delta's own SkyMiles Amex credit cards, you only earn 1 or 2 miles for every dollar you spend.

But it's much easier to accumulate miles using a credit card than a frequent flyer card given that you can use it for all spending rather than just travel. And many credit cards give you the flexibility to use the miles for multiple airlines rather than just a single one.

How much is a credit card mile worth?

MoneyUnder30 says that on average, one credit card mile is worth approximately 1 cent in travel rewards – so if you have accrued 10,000 miles or points on your credit card, that's $100 in rewards.

However, the true value of the mile/point will depend on how you redeem it.

For example, they could be worth 0.75 cents per mile if used to buy a domestic coach ticket, but up to 3 cents per mile if used to buy an international business class ticket.

Given this fact, and the huge array of airline miles credit cards and frequent flyer programs there are out there, figuring out the worth of your miles can be incredibly complicated, with much depending on your own travel preferences and spending habits.

The best air miles credit cards out there

Travel blog Boarding Area argues the most valuable credit card miles/points are ones that are transferrable,and not tied to specific airlines.

It's hard to argue against that, as they can be used in a wide range of airline miles programs, giving you the flexibility that's crucial when booking flights or hotels.

Also referred to as "universal" credit card miles, they won't have the blackout dates or restrictions common with frequent flyer programs.

Here are some of the best cards for miles right now:

For value when redeeming miles

Card:Chase Sapphire Preferred Card

Annual fee: $0 first year, $95 after.

How many miles you accrue: 2 miles per $1 spent on travel and restaurants, 1 mile per $1 on all other spending.

Interest rate: 16.99-23.99 percent, depending on credit score.

This has three advantages: Firstly, its sign-up bonus gives you 50,000 miles if you spend $4,000 on the card within 90 days of signing up. That's one of the most generous bonuses out there.

Secondly, you get a 25 percent bonus if you redeem your points for travel using Chase Ultimate rewards. This means 50,000 points is worth $625 instead of $500 if used directly with an airline.

Thirdly, it allows you to transfer your points into frequent flyer miles (which remember, are more generous) at a 1:1 rate for several airlines. These include United MileagePlus and Flying Blue Air France KLM, which fly direct to Europe from MSP (crucially, you can also go through Flying Blue to use your miles to book Delta flights).

When on a budget

Card:Bank of America Travel Rewards Card

Annual fee: $0.

How many miles you accrue: 1.5 points per $1 spent.

Interest rate: 0 percent for 12 months, 15.99-23.99 percent variable thereafter.

This is a decent air miles card if you're on a budget, as it doesn't come with an annual fee and the introductory bonus points it offers – 20,000 – only requires $1,000 of spending within three months.

It also doesn't charge a foreign transaction fee.

For accruing miles

Card:Barclaycard Arrival Plus World Elite Mastercard

Annual fee: $0 the first year, $89 after.

How many miles you accrue: 2.1 per $1 spent.

Interest rate: 16.99-23.99 percent variable depending on credit score.

This is one of the best cards for accruing miles, as it offers 2 points per dollar on all spending. What's more, it gives you a 5 percent rebate whenever you redeem those points, adding an extra 0.1 miles for every dollar spent.

It also comes with a 40,000-mile bonus if you spend $3,000 within 90 days of signing up, which is worth $420 when redeemed ($400 plus $20 for the 5 percent rebate). 

The verdict

There's no definitive way of answering whether air miles credit cards are worth it, just because it depends on who you are as a consumer.

If you're a seasoned traveler, then the perks that come with miles credit cards will have greater value.

If you're an occasional flyer, you could effectively use a miles card as a savings account, banking miles to pay off an entire trip at some point in the future.

However, you can use a regular cash back card much in the same way, often getting a similar or even better rate of return on your spending compared to a miles card. 

As ever with credit cards, don't let the flashy bonus offers and miles/cash back rates distract you from ensuring you can afford to pay off your entire bill every month, to avoid paying interest on your debts.

Next Up

Related